Going Public

On Thursday afternoon, Twitter said it is planning to put 70 million shares on the market at from $17 to $20 per unit. Based on these prices, the company would be valued at around $11 billion and would raise as much as $1.4 billion. The valuation could rise to almost $14 billion, depending on how employees and investors exercise their stock options.

This is a further reminder that although Twitter’s initial public offering is often held up as the most anticipated since Facebook’s (FB) IPO, the microblogging company is much smaller. Its valuation is closer to Pinterest’s, which investors recently valued at $3.8 billion, than it is to Facebook’s, which went public last year with a valuation of $104 billion.

As for what happens next—well, we’ve been here before. When Facebook went public, we laid out the whole process. The portion below picks it where Twitter is today, with minor differences. We know Twitter will list on the New York Stock Exchange, for instance. But the basic process is the same.

Basically, Twitter’s executives will now hold a bunch of meetings with investors, trying to convince them to buy and hold chunks of stock. Investors will grill them about Twitter’s slowing growth and large annual losses, or they will enthuse about how people like to tweet while watching television. Based on what the company detects, Twitter could change the offering price during this process, which is known as the road show. The official pricing will happen the night before Twitter starts selling shares, reportedly around Nov. 6.

Pricing an IPO is an inexact science, as Facebook discovered. It’s only when shares begin trading that we’ll learn precisely how the market values the company. At which point, we’ll probably need a new graphic.